Keeping Up Is Hard to Do:
A Trial Judge’s Reading Blog


Anderson v R. [2022] EWCA Crim 1465, November 9, 2022, at paragraphs 61 to 63:

The appellant in the lengthy submissions that he advanced on the subject of “piercing the corporate veil” has essentially asked the court to consider the impact of what is, in the context of the present appeal against sentence, an entirely irrelevant legal concept. There is a prohibition on “piercing the corporate veil” in the sense that ordinarily the courts will not disregard a company’s separate legal personality in order to obtain a remedy against someone other than the company in respect of a liability which would otherwise be that of the company alone (see Baroness Hale of Richmond JSC in Petrodel Resources Ltd v Prest [2013] UKSC 34; [2013] 3 WLR 1 at [92]). This principle can be avoided in limited circumstances, as described by Lord Sumption JSC in Petrodel:

“35.  I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company’s separate legal personality. The principle is properly described as a limited one, because in almost every case where the test is satisfied, the facts will in practice disclose a legal relationship between the company and its controller which will make it unnecessary to pierce the corporate veil. […] But the recognition of a small residual category of cases where the abuse of the corporate veil to evade or frustrate the law can be addressed only by disregarding the legal personality of the company is, I believe, consistent with authority and with long-standing principles of legal policy.”

The appellant had pleaded guilty to offences that he had committed as a Director of PCR. The judge stated in passing sentence as regards the appellant: “you leased the premises in Deeside from Tilestone Limited. At that time you were only authorised to hold 12,000 tonnes on the outside of the site”; “you also took a lease in Penrhos on the old Anglesey Aluminium Site. You obtained an S2 exemption that allowed you to keep 500 tonnes of waste on the site”; “I know that you have made an application for […] an environment permit to have more waste at the site”; “you had sole control of the company (viz. PCR)”; and “the aggravation here is that, in my judgment, this is for financial gain, you were not running that business for altruistic reasons, you were running that business as a commercial venture and, of course, the extent of the costs of the clean-up moves it up through the range”. It is argued that the judge’s approach had the result that “the liability of PCR was treated as a financial gain of the appellant personally and assessed as a major aggravating feature in effect extinguishing the mitigation”. In this sense, the corporate veil had been impermissibly pierced.

We do not accept that contention. Given this principle is essentially concerned with the limited circumstances in which the “the separate personality of the company” can be disregarded in order to obtain a remedy against someone other than the company in respect of a liability which would otherwise be that of the company alone, it has no relevance to the fact-finding exercise that a judge undertakes in passing sentence. The judge was assessing the correct punishment to be imposed as a consequence of this criminality (see R v Boyle Transport (Northern Ireland) Ltd [2016] EWCA Crim 19; [2016] 4 WLR 63 at [90]), criminality which was admitted. The judge was considering, vis-à-vis culpability, issues such as whether the appellant had intentionally breached or flagrantly disregarded the law, and as regards harm, the extent of the environmental impact, or risk thereof, including the costs of the clean-up operation. These considerations do not involve piercing the corporate veil in the sense prohibited by the established jurisprudence; instead, the judge was assessing the extent of the punishment that was appropriate for the appellant’s role as a director in what had taken place, bearing in mind the harm caused and his culpability. In a similar vein, the judge is enjoined by the Guideline to take into account the appellant’s motive as a director of the company, namely whether he was acting altruistically or for commercial advantage (one of the non-statutory aggravating features of the offence is whether it was committed for financial gain).